A mortgagee has some duties to the mortgagor which are in the nature of trusteeship. That has led a number of judges, such as Lord Hardwicke, LC, in Casborne v Scarfe to describe a mortgagee as a trustee. A mortgagee has some power to do as he pleases with the mortgaged property, leading a number of judges to deny that a mortgagee is a trustee. Examples are Pawlett v A-G. , and Sinfield v Sweet . Pennycuick, J. In Marquis Cholmondeley v Lord Clinton , Plumer, MR, warned of the deleterious effects of similes and described the relationship of mortgagor and mortgagee as “perfectly anomalous and sui generous.” Subsequently the courts put forward different analogies: (i) before the date of redemption, he is tenant in mortgage; (ii) after…show more content… The mortgagee buy from the mortgagor
Once the mortgage has been made, the mortgagee may buy the equity of redemption from the mortgagor for a fresh consideration. (see pp. 127-139, ante, as to agreements in the mortgage deed restricting the mortgagor’s ownership of the equity of redemption.) A trustee may buy a beneficiary’s interest, but there is a presumption of undue influence in such a transaction. There is no presumption when a mortgagee buys the equity of redemption: the relationship between the parties is regarded as that of an ordinary vendor and purchaser . That is true also when the mortgagee buys from a prior mortgagee, and even if the purchasing mortgagee holds a mortgage in the form of a trust for sale.
The Doctrine of Graft.
This is generally known as the rule in Keech v Sandford , that any accretion to trust property, even if on the face of it meant for the trustee beneficially, is held on the same trusts as the original trust property. Later, the courts also held that depositees of a lease by way of mortgage were bound to seek renewal (on the expiry of the lease) on behalf of the mortgagor, “for , taking it as a deposit of deeds, they make themselves trustees of the mortgagor, subject to their own debt, which was secured on the property.”
If there is a trusteeship in this respect, it cuts both ways. The mortgagor may be subject to graft. The doctrine was applied to mortgages in that way long before Keech v